- Two major UAE banks beat Q1 profit estimates thanks to a strong economy and higher interest rates. First Abu Dhabi Bank PJSC reported a profit of 3.93 billion dirhams ($1.07 billion), exceeding analysts' predictions of 3.21 billion dirhams. Excluding a one-time gain from the previous year's sale of a payments business stake, profit rose 70% YoY, with net interest income increasing by 41% and growth seen across all business segments. The bank attracted 80 billion dirhams in deposits, but impairments rose by 74% to 798 million dirhams.
- Dubai's Emirates NBD PJSC reported that its first-quarter earnings surpassed analysts' estimates of 4.84 billion dirhams as it more than doubled to 6 billion dirhams. The bank's net interest income increased by 69% to 7.2 billion dirhams, while its impairments dropped by 66% to 500 million dirhams during this period.
Why it matters
Following the successful management of the COVID-19 outbreak by the government, the UAE's economy has been thriving. This has led to an increase in interest from investors seeking a secure location to invest their funds. The Gulf region's banks, with the support of wealthy governments and higher oil prices, are aiming to expand their role in the global financial sector. While both banks anticipate further growth for the UAE economy, it may not maintain its current pace. FAB predicts an average growth rate of 5% for this year, compared to over 7% in 2022, and a real GDP growth of just above 4% on average for next year.
